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INVESTMENT SECURITIES
 9 Months Ended
Sep. 30, 2022
Investments, Debt and Equity Securities [Abstract]  
INVESTMENT SECURITIES
INVESTMENT SECURITIES

The following table summarizes the amortized cost, gross unrealized gains and losses and approximate fair value of investment securities available for sale as of September 30, 2022 and December 31, 2021.

 Amortized
Cost		Gross Unrealized
Gains		Gross Unrealized
Losses		Fair
Value
Available for sale at September 30, 2022    
U.S. Treasury$2,107 $— $40 $2,067 
U.S. Government-sponsored agency securities121,907 — 16,141 105,766 
State and municipal1,611,859 93 266,996 1,344,956 
U.S. Government-sponsored mortgage-backed securities627,583 1 108,795 518,789 
Corporate obligations13,036 — 642 12,394 
Total available for sale$2,376,492 $94 $392,614 $1,983,972 

 Amortized
Cost		Gross Unrealized
Gains		Gross Unrealized
Losses		Fair
Value
Available for sale at December 31, 2021    
U.S. Treasury$1,000 $— $1 $999 
U.S. Government-sponsored agency securities96,244 437 1,545 95,136 
State and municipal1,495,696 81,734 898 1,576,532 
U.S. Government-sponsored mortgage-backed securities671,684 7,109 11,188 667,605 
Corporate obligations4,031 256 8 4,279 
Total available for sale$2,268,655 $89,536 $13,640 $2,344,551 


The following table summarizes the amortized cost, gross unrealized gains and losses, approximate fair value and allowance for credit losses on investment securities held to maturity as of September 30, 2022 and December 31, 2021.

Amortized
Cost		Allowance for Credit LossesNet Carrying AmountGross Unrealized
Gains		Gross Unrealized
Losses		Fair
Value
Held to maturity at September 30, 2022   
U.S. Government-sponsored agency securities$399,089 $— $399,089 $— $66,514 $332,575 
State and municipal1,114,312 245 1,114,067 113 256,834 857,591 
U.S. Government-sponsored mortgage-backed securities796,140 — 796,140 — 120,709 675,431 
Foreign investment1,500 — 1,500 — 9 1,491 
Total held to maturity$2,311,041 $245 $2,310,796 $113 $444,066 $1,867,088 


Amortized
Cost		Allowance for Credit LossesNet Carrying AmountGross Unrealized
Gains		Gross Unrealized
Losses		Fair
Value
Held to maturity at December 31, 2021    
U.S. Government-sponsored agency securities$371,457 $— $371,457 $226 $7,268 $364,415 
State and municipal1,057,301 245 1,057,056 29,593 2,170 1,084,724 
U.S. Government-sponsored mortgage-backed securities749,789 — 749,789 7,957 5,881 751,865 
Foreign investment1,500 — 1,500 — 1 1,499 
Total held to maturity$2,180,047 $245 $2,179,802 $37,776 $15,320 $2,202,503 


Accrued interest on investment securities available for sale and held to maturity at September 30, 2022 and December 31, 2021 of $27.5 million and $26.8 million, respectively, are included in the Interest Receivable line on the Corporation's Consolidated Condensed Balance Sheets. The total amount of accrued interest is excluded from the amortized cost of available for sale and held to maturity securities presented above.
In determining the allowance for credit losses on investment securities available for sale that are in an unrealized loss position, the Corporation first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through the income statement. For investment securities available for sale that do not meet the aforementioned criteria, the Corporation evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Corporation considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Unrealized losses that have not been recorded through an allowance for credit losses is recognized in other comprehensive income. Adjustments to the allowance are reported in the income statement as a component of the provision for credit loss. The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities available for sale from the estimate of credit losses. Investment securities available for sale are charged off against the allowance or, in the absence of any allowance, written down through the income statement when deemed uncollectible or when either of the aforementioned criteria regarding intent or requirement to sell is met. The Corporation did not record an allowance for credit losses on its investment securities available for sale as the unrealized losses were attributable to changes in interest rates, not credit quality.

The allowance for credit losses on investment securities held to maturity is a contra asset-valuation account that is deducted from the amortized cost basis of investment securities held to maturity to present the net amount expected to be collected. Investment securities held to maturity are charged off against the allowance when deemed uncollectible. Adjustments to the allowance are reported in the income statement as a component of the provision for credit loss. The Corporation measures expected credit losses on investment securities held to maturity on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Corporation has made the accounting policy election to exclude accrued interest receivable on investment securities held to maturity from the estimate of credit losses. With regard to U.S. Government-sponsored agency and mortgage-backed securities, all these securities are issued by a U.S. government-sponsored entity and have an implicit or explicit government guarantee; therefore, no allowance for credit losses has been recorded for these securities. With regard to securities issued by states and municipalities and other investment securities held to maturity, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. Historical loss rates associated with securities having similar grades as those in the Corporation's portfolio have been insignificant. Furthermore, as of September 30, 2022, there were no past due principal and interest payments associated with these securities. At CECL adoption, an allowance for credit losses of $245,000 was recorded on the state and municipal securities classified as held to maturity based on applying the long-term historical credit loss rate, as published by Moody’s, for similarly rated securities. The balance of the allowance for credit losses remained unchanged at $245,000 as of September 30, 2022.

On a quarterly basis, the Corporation monitors the credit quality of investment securities held to maturity through the use of credit ratings. The following table summarizes the amortized cost of investment securities held to maturity at September 30, 2022, aggregated by credit quality indicator.
Held to Maturity
State and municipalOtherTotal
Credit Rating:
Aaa$101,372 $70,582 $171,954 
Aa1162,890 — 162,890 
Aa2185,511 — 185,511 
Aa3135,285 — 135,285 
A1131,413 — 131,413 
A210,167 — 10,167 
A310,115 — 10,115 
Non-rated377,559 1,126,147 1,503,706 
Total$1,114,312 $1,196,729 $2,311,041 
The following tables summarize, as of September 30, 2022 and December 31, 2021, investment securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by security type and length of time in a continuous unrealized loss position.
Less than 12 Months12 Months or LongerTotal
Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses
Investment securities available for sale at September 30, 2022
U.S. Treasury$2,067 $40 $— $— $2,067 $40 
U.S. Government-sponsored agency securities67,039 7,453 38,727 8,688 105,766 16,141 
State and municipal1,229,682 234,780 90,765 32,216 1,320,447 266,996 
U.S. Government-sponsored mortgage-backed securities206,559 23,141 312,109 85,654 518,668 108,795 
Corporate obligations12,363 642 — — 12,363 642 
Total investment securities available for sale$1,517,710 $266,056 $441,601 $126,558 $1,959,311 $392,614 

 
Less than 12 Months12 Months or LongerTotal
Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses
Investment securities available for sale at December 31, 2021
U.S. Treasury$999 $1 $— $— $999 $1 
U.S. Government-sponsored agency securities68,524 1,545 — — 68,524 1,545 
State and municipal138,187 894 505 4 138,692 898 
U.S. Government-sponsored mortgage-backed securities427,687 10,791 8,324 397 436,011 11,188 
Corporate obligations992 8 — — 992 8 
Total investment securities available for sale$636,389 $13,239 $8,829 $401 $645,218 $13,640 


The following table summarizes investment securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by security type and the number of securities in the portfolio for the periods indicated.

Gross
Unrealized
Losses		Number of Securities
Investment securities available for sale at September 30, 2022
U.S. Treasury$40 4
U.S. Government-sponsored agency securities16,141 17
State and municipal266,996 1074
U.S. Government-sponsored mortgage-backed securities108,795 176
Corporate obligations642 10
Total investment securities available for sale$392,614 1,281 

Gross
Unrealized
Losses		Number of Securities
Investment securities available for sale at December 31, 2021
U.S. Treasury$1 1
U.S. Government-sponsored agency securities1,545 8
State and municipal898 103
U.S. Government-sponsored mortgage-backed securities11,188 48
Corporate obligations8 1
Total investment securities available for sale$13,640 161


The unrealized losses in the Corporation’s investment portfolio were the result of changes in interest rates and not credit quality. As a result, the Corporation expects to recover the amortized cost basis over the term of the securities. The Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity.
Certain investment securities available for sale are reported in the financial statements at an amount less than their historical cost as indicated in the table below.
September 30, 2022December 31, 2021
Investments available for sale reported at less than historical cost:  
Historical cost$2,351,925 $658,858 
Fair value1,959,311 645,218 
Gross unrealized losses$392,614 $13,640 
Percent of the Corporation's investments available for sale98.8 %27.5 %


In determining the fair value of the investment securities portfolio, the Corporation utilizes a third party for portfolio accounting services, including market value input, for those securities classified as Level 1 and Level 2 in the fair value hierarchy.  The Corporation has obtained an understanding of what inputs are being used by the vendor in pricing the portfolio and how the vendor classified these securities based upon these inputs.  From these discussions, the Corporation’s management is comfortable that the classifications are proper.  The Corporation has gained trust in the data for two reasons:  (a) independent spot testing of the data is conducted by the Corporation through obtaining market quotes from various brokers on a periodic basis; and (b) actual gains or loss resulting from the sale of certain securities has proven the data to be accurate over time.   Fair value of securities classified as Level 3 in the valuation hierarchy was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.

The amortized cost and fair value of investment securities available for sale and held to maturity at September 30, 2022 and December 31, 2021, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity are shown separately.
 Available for SaleHeld to Maturity
 Amortized CostFair ValueAmortized CostFair Value
Maturity Distribution at September 30, 2022    
Due in one year or less$4,646 $4,617 $6,428 $6,439 
Due after one through five years14,329 13,776 71,303 67,777 
Due after five through ten years176,931 161,885 156,564 139,284 
Due after ten years1,553,003 1,284,905 1,280,606 978,157 
 1,748,909 1,465,183 1,514,901 1,191,657 
U.S. Government-sponsored mortgage-backed securities627,583 518,789 796,140 675,431 
Total investment securities$2,376,492 $1,983,972 $2,311,041 $1,867,088 

Available for SaleHeld to Maturity
Amortized CostFair ValueAmortized CostFair Value
Maturity Distribution at December 31, 2021    
Due in one year or less$6,954 $6,965 $6,971 $6,995 
Due after one through five years5,097 5,309 30,272 31,946 
Due after five through ten years120,460 126,816 177,203 180,129 
Due after ten years1,464,460 1,537,856 1,215,812 1,231,568 
 1,596,971 1,676,946 1,430,258 1,450,638 
U.S. Government-sponsored mortgage-backed securities671,684 667,605 749,789 751,865 
Total investment securities$2,268,655 $2,344,551 $2,180,047 $2,202,503 


Securities with a carrying value of approximately $965.8 million and $873.2 million were pledged at September 30, 2022 and December 31, 2021, respectively, to secure certain deposits and securities sold under repurchase agreements, and for other purposes as permitted or required by law.

The book value of securities sold under agreements to repurchase amounted to $231.8 million at September 30, 2022 and $175.1 million at
December 31, 2021.

Gross gains and losses on the sales and redemptions of investment securities available for sale for the three and nine months ended September 30, 2022 and 2021 are shown below.
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Sales and redemptions of investment securities available for sale:    
Gross gains$495 $1,915 $1,176 $5,814 
Gross losses14 159 39 498 
Net gains on sales and redemptions of investment securities available for sale$481 $1,756 $1,137 $5,316